State governments use many different policies to spur economic development, including tax incentives, cash grants, workforce training, and development and maintenance of reliable infrastructure. But which programs successfully lure and maintain businesses and lead to better jobs, higher wages, and more tax revenue?

To help answer some of these questions, we put together a toolkit of resources and actionable solutions that state policymakers and economic development practitioners can use to better coordinate their resources, evaluate programs, and improve policies.

Successful economic development strategies will coordinate investments, making sure to align goals and approaches across different agencies and programs. Governments should target their resources toward gaps in support that businesses cannot fill through the private marketplace. Business assistance and tax incentives are common tools that governments use to promote devleopment, but workforce and community investments can also help create the conditions for sustainable economic growth.

The state legislature’s job is not only to propose and enact legislation for creating new economic development programs, but to monitor the state’s economic development tool kit and decide if it’s working or not and, if required, how to fix it.

William Schweke, “An Economic Development Strategy for the 21st Century: The Role of State Policy in Strengthening the Economy,” 2009.

Evaluating Economic Development Policies

Evaluating economic development initiatives is challenging because each location, economy, and program is unique, making it difficult to compare outcomes in one state to outcomes in another. To help, we’ve pulled together some resources on program evaluation.

Workforce and Economic Development

Having a skilled workforce is often a top priority for companies looking to expand or relocate. Workforce development initiatives seek to connect firms with skilled labor while giving workers the opportunity to obtain jobs with good benefits and sustaining wages. States should consider coordinating their economic development and workforce strategies.

Taxes and Economic Development

Tax incentives and tax policy often make up a sizable portion of state economic development investments. How do states use taxes to encourage economic development, how do they report on tax breaks to business, and how can they improve?

​Critical Value Podcast: Amazon and economic development

Cities are offering huge tax incentives, infrastructure improvements, and more to land the new Amazon headquarters. But are these deals good for cities? State and local finance researcher Megan Randall joins Urban’s podcast, Critical Value, to explain the opportunities, pitfalls, and trade-offs of economic development policies.

Critical Value Podcast: Opportunity Zones and Community Development

Opportunity Zones have the potential to make a huge economic impact on disinvested communities across the country. Host Justin Milner speaks with researchers Brett Theodos and Brady Meixell on how this brand-new economic development initiative works, and how we’ll know if it’s truly successful.

About the Project

The State and Local Finance Initiative is an Urban Institute project in the Urban-Brookings Tax Policy Center. The initiative equips policymakers, citizens, and the media with tools to understand and address the fiscal challenges and opportunities facing state and local governments.

This project is funded by the Laura and John Arnold Foundation. We are grateful to them and to all our funders, who make it possible for the Urban-Brookings Tax Policy Center to advance its mission. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders. Funders do not determine research findings or the insights and recommendations of Urban experts.